GSE Reform

Last week the Senate Banking Committee voted 13-9 to approve legislation to reform the housing finance system. The “Johnson-Crapo” bill, like other GSE-reform measures, is aimed at winding down Fannie Mae and Freddie Mac, and ultimately limiting taxpayer liability. Additionally, it would create a new Federal Mortgage Insurance Corporation, modeled after the FDIC, and form a mutual cooperative jointly owned by small lenders.

Chairman Jeb Hensarling’s PATH Act was passed out of the House Financial Services Committee last summer. The full House has yet to consider GSE reform, and is not expected to do so.

GSE reform is a very complex issue, with strong competing interests holding divergent opinions on the ultimate outcome. The prospects of a solution in this Congress are minimal at best, however, we do anticipate some focus on this issue after the first of the year when a new Congress is sworn in.

We will continue to press lawmakers to ensure that any solution provides community banks a viable and non-discriminatory conduit to the secondary market.

HE Modifications

The Texas Supreme Court issued an opinion in a case involving modifications of home equity loans, Sims v. Carrington Mortgage Services, L.L.C. The Court determined that, when no additional funds are advanced and the original note is not satisfied and replaced, a “restructuring is valid and need not meet the constitutional requirements for a new loan.” The Court further held that a restructuring that capitalizes past-due amounts owed under the terms of the initial loan, but does not satisfy or replace the original loan, is not a new extension of credit that must meet the constitutional requirements for a new loan. Finally, the Court concluded that restructuring a home equity loan more than once to avoid foreclosure “does not remotely resemble” an open-end account subject to the constitutional provisions on home equity lines of credit. IBAT, TBA and TMBA jointly filed an amicus brief.

For a home equity lender, this means that, as long as a restructuring doesn’t satisfy and replace the original note, the lender may:

  1. Capitalize past-due amounts owed under the terms of the initial loan;
  2. Restructure the loan without meeting the constitutional provisions again (e.g. the bank may disregard the fact that the current loan-to-value is greater than 80%); and

Modify a home equity loan multiple times to avoid foreclosure without complying with the constitutional provisions on home equity lines of credit.

Please Vote!

Early voting for the May 27 runoff elections runs through this Friday.  IBAT strongly encourages you to exercise your right to vote, and to urge those in your circle of influence to do the same.  Polling locations can be found here, along with additional information about the elections.  You may also access your County Clerk’s website for information regarding polling locations.  And... don’t forget your government-issued photo ID.

We have provided a listing of candidates we’ve supported with PAC funds this cycle, for your reference.  Those receiving IBAT PAC support are either “friendly incumbents” with whom we’ve worked well over the years, or were the clear “winner” in various polls and surveys of IBAT members.  In a number of cases on both statewide and district races, the membership was split, and we opted to remain neutral.

Thank you for your involvement in the process and for your continued support of IBAT and the PACs.

Networking Event for AMs

The IBAT Associate Member Advisory Council is proud to present the Dallas area Associate Member Complimentary Area Networking Event on May 22. We encourage all IBAT associate members to take advantage of this FREE opportunity to experience associate member "speed dating," with incentives, and opportunities to:

  • Increase your prospect list;
  • Enhance relationships;
  • Continue to build your network; and
  • Get sales call tips from a community banker.

You will get a chance to learn about the IBAT Leadership Division and its regional meetings, as well as provide IBAT with feedback on how we can help you get more out of your membership.

We hope to see you in Irving on May 22!

Industry Update: May 2014

Last Friday, IBAT held its quarterly Associate Member Industry Update Call. The audio recording of the call, as well as the call notes, are now available on the IBAT website.  

Following feedback from attendees and the Associate Member Advisory Council, IBAT has increased the frequency of the industry update calls to once per quarter. The next call is scheduled for Friday, September 19, 2014 from 9:30-10:00a.m.  Please make plans to register.

Baker Market Update: May 19, 2014

The bond market rallied impressively this week spurred by a variety of factors including international angst, economic malaise, and short-covering by those who’ve bet heavily on rising rates. The 10yr US Treasury yield began the week at 2.65% and ended at 2.50%, the lowest level since last July. Moreover, since the beginning of the year, the 10yr has rallied 50bps (from 3% to 2.5%) in spite of $40 billion of Fed “tapering”. This raises a questioning eyebrow. Why are rates falling even as the Fed exits?

Read more in the Baker Market Update.

PAC Drive Success

March is “PAC Drive Month” at IBAT.  We are pleased to report that your efforts resulted in a record $200,000+ from 84 participating member banks for the IBAT PAC and IBAT FedPAC!  These contributions will help elect lawmakers who support community banks and understand the unique role you play in the Texas financial services marketplace.   

A special “thank you” to Chairman Kevin Monk and the Leadership Division Board of Directors who made it their goal to raise more money for the PACs than in previous years.  We'd also like to thank the individuals who coordinated this effort in your banks - we could not have done it without your help!  And, lastly, we'd like to congratulate Jim Lindemann, Doak Hartley, the board, officers and employees of Industry State Bank for being the winners in the IBAT PAC Drawing.  Their bank was drawn from all of the participating PAC Drive Banks and in appreciation IBAT staff will travel to the bank to prepare and serve a barbeque dinner. 

IBAT Associate Members are in the thick of their fundraising efforts for the PACs.  Led by Billy Granville of Granville Financial Group, who serves as the chairman of the IBAT Associate Member Advisory Council, our industry partners have designated the month of May as their PAC Drive Month. "We are very grateful for the support of our IBAT family Associate Members who not only provide quality products and services to our member banks but who also understand the importance of engagement in the political process," said IBAT President and CEO Chris Williston.

Dell Discounts

IBAT endorsed service provider, Dell, is offering yet another great discount to IBAT members this month.

During the month of May, save 40% on any Dell PowerEdge Server. Take advantage of this great offer by visiting Dell's website or by contacting Denney James at 512-728-8763. For the best price, remember to use the coupon code 9H5?PT?M?2GPVJ, as well as IBAT member ID link GS126658178, when placing your order.

For orders more than 5 units, please reach out to Denney James at denney_james@dell.com or 512-728-8763.

Peace Officer Memorial Day

Please be advised that by Texas statute, the State of Texas flag should be displayed at half-staff tomorrow, May 15, 2014, in honor of Peace Officer Memorial Day. Also note that the president has issued a directive concerning the flying of the United States flag below.




Each year, America sets aside a week to salute the men and women who do the difficult, dangerous, and often thankless work of safeguarding our communities. Our Nation's peace officers embody the very idea of citizenship -- that along with our rights come responsibilities, both to ourselves and to others. During Peace Officers Memorial Day and Police Week, we celebrate those who protect and serve us every minute of every day, and we honor the courageous officers who devoted themselves so fully to others that in the process they laid down their lives.

As we mourn the fallen, let us also remember how they lived. With unflinching commitment, they defended our schools and businesses. They guarded prisons; patrolled borders; and kept us safe at home, on the road, and as we went about our lives. To their families, we owe an unpayable debt. And to the men and women who carry their mission forward, we owe our unyielding support.

Our Nation has an obligation to ensure that as police officers face untold risks in the line of duty, we are doing whatever we can to protect them. This means providing all necessary resources so they can get the job done, hiring new officers where they are needed most, and investing in training to prepare those on the front lines for potentially deadly situations. It also means making reforms to curb senseless epidemics of violence that threaten law enforcement officers and haunt the neighborhoods they serve.

Just as police officers never let down their guard, we must never let slide our gratitude. We should extend our thanks not only in times of tragedy, but for every tragedy averted -- every accident avoided because a patrol officer took a drunk driver off the streets, every child made safer because a criminal was brought to justice, every life saved because police officers raced to the scene. In other words, we must show our gratitude every day.

By a joint resolution approved October 1, 1962, as amended (76 Stat. 676), and by Public Law 103-322, as amended (36 U.S.C. 136-137), the President has been authorized and requested to designate May 15 of each year as "Peace Officers Memorial Day" and the week in which it falls as "Police Week."

NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, do hereby proclaim May 15, 2014, as Peace Officers Memorial Day and May 11 through May 17, 2014, as Police Week. I call upon all Americans to observe these events with appropriate ceremonies and activities. I also call on Governors of the United States and the Commonwealth of Puerto Rico, officials of the other territories subject to the jurisdiction of the United States, and appropriate officials of all units of government, to direct that the flag be flown at half-staff on Peace Officers Memorial Day. I further encourage all Americans to display the flag at half-staff from their homes and businesses on that day.

IN WITNESS WHEREOF, I have hereunto set my hand this ninth day of May, in the year of our Lord two thousand fourteen, and of the Independence of the United States of America the two hundred and thirty-eighth.


Reg Burden Bills Moving

In follow up to last week’s Bottom Line, the House Financial Services Committee met last week to mark up several bills of importance to IBAT members, including:

  • H.R. 2673, which confers QM status to any loan kept in-portfolio;
  • H.R. 3211, which modifies the definition of points and fees to exclude insurance and taxes held in escrow as well as fees paid to affiliated companies; 
  • H.R. 4466, which requires various regulators to assess duplicity or conflict with existing rules prior to issuance of a new rule, and also requires a review of existing regulations within 60 days of a proposed rulemaking; and
  • H.R. 4521, which exempts creditors under $10 billion from escrow requirements on in-portfolio loans and increases the small mortgage servicer exemption to 20,000.

Only one of the bills, H.R. 3211, was voted on by the Committee. Chair Jeb Hensarling announced at the end of the meeting that a vote on each of the other measures would be delayed until Congress was back from recess next week. The delay, however, was more a question of logistics than a tip off that there might be concerns with any of the other measures. As members of Congress are home in the district this week, if you happen to attend any event with members of the House Financial Services Committee, please urge their support for each of these bills.

White Paper

While community banks were spared from the worst of the Basel III rules finalized earlier this year, several issues still remain of concern to IBAT members.  In particular, some community banks are grappling with the impact of consolidated capital requirements applicable to growing bank holding companies that exceed or expect to exceed $500 million in total consolidated assets.

The consolidated capital requirements are of particular concern to banks organized as Subchapter S corporations because there are no provisions that allow for a carve out for the banks to continue making dividend payments if the corporation fails to maintain the appropriate capital conservation buffer.  While the phased-in thresholds are substantially below the capital levels currently being required by the regulatory authorities at the bank level, capital standards on a consolidated basis could prove problematic.  

IBAT Associate Member Fenimore, Kay, Harrison & Ford, LLP has prepared a white paper on this issue for the use of IBAT members.  Additionally, the Subchapter S Bank Association, ICBA and other trade groups have written letters to regulators urging the creation of carve out for S corporation shareholder dividends. The Subchapter S Bank Association letter can be found here.

The Newest IBAT Endorsement


IBAT is pleased to announce its endorsement of the WatchDOG® Social Compliance solution from Computer Services, Inc. (CSI). WatchDOG Social Compliance provides financial institutions with advanced compliance capabilities and protection for participating in social media across multiple online platforms.

 “Although the risk of compliance violations and the added time required to engage in these outlets has many institutions hesitant to adopt, examiners nevertheless expect institutions to monitor and manage their social presence,” said Chris Williston, IBAT’s President and CEO. “WatchDOG Social Compliance allows institutions to eliminate these apprehensions and explore the benefits of social media with a resource in place to mitigate risk.”

WatchDOG Social Compliance offers users a vast range of tools and services to further promote full regulatory compliance, including:

  • Archiving all Facebook, Twitter, YouTube and LinkedIn posts for required timeframes;
  • Creating an approval process to ensure posts meet regulatory requirements;
  • Utilizing targeted search and reporting capabilities;
  • Performing reputation and sentiment analysis; and
  • Evaluating the institution’s competitive landscape.

 IBAT’s full press release can be viewed here.

IBAT Endorses CSI's WatchDOG

PADUCAH, Ky., May 13, 2014 – The Independent Bankers Association of Texas (IBAT) has announced its endorsement of the WatchDOG® Social Compliance solution from Computer Services, Inc. (CSI) (OTCQX: CSVI), a provider of end-to-end technology solutions that empower financial institutions to remain competitive, compliant and profitable. WatchDOG Social Compliance provides financial institutions with advanced compliance capabilities and protection for participating in social media across multiple online platforms.

CSI’s WatchDOG Social Compliance solution helps those institutions new to social media, as well as more experienced organizations, more accurately follow the processes outlined within their unique risk assessment strategy. By implementing the solution, financial institutions also can more efficiently manage social media compliance with the latest regulatory requirements, allowing them to leverage social media without the risk of violating the growing list of compliance regulations.

“Consumers turn to social media outlets to publically share their opinions and experiences, so the adoption of social media for banks provides a level of insight previously unheard of just a few years ago,” said Chris Williston, IBAT’s president and chief executive officer. “Although the risk of compliance violations and the added time necessary to actively monitor these outlets has many institutions hesitant to adopt, WatchDOG Social Compliance eliminates these apprehensions and allows institutions to enjoy the benefits of social media without the added risks.”

In order to help better manage bank social media participation and strengthen brand awareness among customers, WatchDOG Social Compliance offers users a vast range of tools and services to further promote full regulatory compliance, including:

  • Archiving all Facebook, Twitter, YouTube and LinkedIn posts for required timeframes;
  • Creating an approval process to ensure posts meet regulatory requirements;
  • Utilizing targeted search and reporting capabilities;
  • Performing reputation and sentiment analysis; and
  • Evaluating the institution’s competitive landscape.

Based on additional guidance from the Consumer Financial Protection Bureau (CFPB) surrounding unfair, deceptive or abusive acts and practices (UDAAP), WatchDOG Social Compliance also provides financial institutions with a social media monitoring tool for managing customer complaints, and gives federal regulators the necessary information to complete social compliance audits.

Since 1998, CSI Regulatory Compliance has provided organizations with software solutions and consulting services focused on risk management, watch list screening and fraud prevention. As a leader in regulatory compliance, CSI offers solutions and services that ensure customer success by leveraging the latest technology advancements to consistently deliver superior results.

“As regulatory pressure continues to build with the introduction of new compliance guidelines, a large portion of today’s financial institutions find themselves overwhelmed with managing compliance, which prevents them from exploring such valuable new arenas as social media,” said Paul Koziarz, president and general manager of CSI Regulatory Compliance. “By implementing our WatchDOG Social Compliance solution, banks can successfully capitalize on greater customer insight and communication capabilities available through social media without neglecting other compliance responsibilities.”

About Computer Services, Inc.

Computer Services, Inc. (CSI) delivers core processing, managed services, mobile and Internet solutions, payments processing, print and electronic distribution, and regulatory compliance solutions to financial institutions and corporate customers across the nation. Exceptional service, dynamic solutions and superior results are the foundation of CSI’s reputation and have resulted in the company’s inclusion in such top industry-wide rankings as the FinTech 100, Talkin’ Cloud 100 and MSPmentor Top 501 Global Managed Service Providers List. CSI’s stock is traded on OTCQX under the symbol CSVI. For more information about CSI, visit www.csiweb.com.

About Independent Bankers Association of Texas

Formed in 1974, the Independent Bankers Association of Texas (IBAT) represents Texas community banks. The Austin-based group is the largest state community banking organization in the nation, with membership comprised of more than 2,000 banks and branches in 700 Texas communities. Providing safe and responsible financial services to all Texans, IBAT member bank assets range in size from $10 million to $20 billion with combined assets statewide of nearly $165 billion. IBAT member banks are committed to supporting and investing in their local communities. For more information, visit www.ibat.org

Baker Market Update: May 12, 2014

After newly crowned NBA Most Valuable Player Kevin Durant thanked each of the Oklahoma City Thunder’s season tickets holders by name during his acceptance speech on Tuesday, it made Janet Yellen’s testimony before Congress’s Joint Economic Committee seem like a study in brevity. In briefing the legislators, Ms. Yellen maintained her outlook that the calendar will remain the economy’s best friend as the negative effects of winter’s harshness have ended and the advent of spring will propel the wheels of commerce into the fast lane. Well, at least out of the slow lane. She is concerned however, that higher home prices and mortgage rates have put the brakes on the housing sector’s recovery.

Read more in the Baker Market Update